TITLE:
Highlights of the 2001 Tax
Act
SOURCE:
NAEA Client Newsletter, Winter 2001
DATE POSTED:
12/07/01
Highlights of the 2001
Tax Act
Many of the changes in the act signed into law
on June7, 2001, will be phased in over the next 9 years. Immediate benefits
include the following:
A new 10% tax bracket
has been created for a portion of income previously taxed at 15%. The tax
rebate checks sent out in the late summer and early fall were reflective
of this change.
Individual tax rates
higher than 15% are reduced effective July 1, 2001, by one-half percent
for 2001. Rates will continue to decline between 2002 and 2006.
The child tax credit
has been increased from $500 to $600 for 2001.
Beginning in 2002, the
annual per-student contribution limit to an Education IRA has been
increased from $500 to $2000.
The estate tax
exemption increased to $1,000,000 for deaths in 2002. The exemption is
$675,000 for deaths in 2001, so the change is a significant savings in
estate taxes.
After 2001, the maximum
annual dollar contribution limit for traditional and Roth IRA
contributions is increased with additional catch-up contributions
available for those over 50.
The dollar limit on the
amount you can defer under a 401(k), 403(b), or salary-reduction SEP is
increased. For 2002, the new threshold is $11,000.
Planning
opportunities for educational savings as well as retirement savings will be
great during 2002.
END OF ARTICLE
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